In the offing more than a year now, Alstom, on November 4, 2015, announced that it closed the sale of its energy business (power generation and grid) to General Electric in a deal worth €12.4 billion. With this sale, Alstom would regain its focus on the rail transport business.
Around 700 million euros will be used to acquire GE’s signaling business, which is allied to rail transport. Interestingly, €2.4 billion will be reinvested in three separate joint ventures with GE in the fields of grid, renewables and French steam, and nuclear. This implies that Alstom will not be completely divested from the businesses that it has sold to GE. However, the details of Alstom’s equity stake in these JVs is yet unknown.
Alstom will also return €3.2-3.7 billion euros to shareholders through a buyback offer. The buyback will be followed by cancellation of shares leading to reduction in capital. “After the full completion of the transaction, Alstom will be deleveraged and rely on a strong balance sheet,” the company said in a statement.
The following is a brief history, spanning over the past 15 years, about the various mergers and acquisitions, involving Alstom.
1999: Alstom and ABB merge their power generation businesses and create a 50:50 joint venture called ABB Alstom Power. This included all of ABB’s power generation activities excluding the nuclear activities. [The nuclear business of ABB was ultimately acquired by Westinghouse.] Alstom’s power activities and industrial gas turbines (except turbines of over 20 mw that Alstom ultimately divested to GE) were part of the joint venture.
2000: ABB exits from the joint venture; the entire power generation business of ABB (that was part of the JV) comes to Alstom. Besides, Alstom already has a large presence in power T&D.
2004: Areva acquires the T&D business of Alstom and calls it Areva T&D
2009: With a view to focus on businesses like nuclear and solar energy, Areva decides to sell of its power transmission & distribution business, Areva T&D. While Alstom and Schneider were the main contenders, GE also puts in its bid.
2012: Alstom acquires the transmission business of Areva T&D and calls it Alstom Grid. The transmission business D accounted for two-thirds of Areva T&D’s business. Schneider Electric acquires the low voltage (distribution) business of Areva T&D. Alstom now has three main businesses—power, grid and transport.
2014: Alstom decides to focus on transport and divest its other business—power and grid. General Electric acquires these businesses in a €12.4-billion deal that closed on November 4, 2015.